The Finance Ministry has now confirmed that some rental rates that the government is paying for occupying certain buildings are way above market rental rates.
Interim Finance Minister Mahendra Chaudhry said steps are now being taken to fix the problem as rental rates could be much lower for some buildings.
Earlier this week, the interim administration terminated the 20 year tenancy agreement for the newly constructed Kadavu House.
It has been confirmed yesterday the interim government gave notice under the tenancy agreement to end the tenancy from 1st January this year. Kadavu Holdings confirmed that under the agreement the interim government will pay outstanding rent for January to June 2008 which amounts to almost $1M.
The 20 year agreement stated that the rent to be paid by the government would be $25 per square foot. However, the interim government wanted the rental to be reduced to $14 per square foot.
Interim Govt Stops Tenancy Agreement 21st May 2008
The interim administration has terminated the 20 year tenancy agreement for the newly constructed Kadavu House.
Representatives of Kadavu Holdings Limited led by manager Ratu Sela Nanovo met with the Interim Attorney General Aiyaz Sayed-Khaiyum about issues relating to the tenancy agreement between the government and Kadavu Holdings for the tenancy of Kadavu House.
It has been confirmed that yesterday, the interim government gave notice under the tenancy agreement to end the tenancy from 1st January this year.
Speaking to Fijivillage, Ratu Sela said the board of Kadavu Holdings welcomed and endorsed the amicable solution reached.
"We had a very cordial meeting with the Attorney General yesterday where we discussed things relating to the tenancy agreement of Kadavu House and finally reached an amicable solution beneficial to both parties involved. And we went away as friends from the Attorney General’s office rather than otherwise. Ratu Sela Nanovo
Ratu Sela confirmed that under the agreement the interim government will pay outstanding rent for January to June 2008 which amounts to almost $1M.
“We decided that the government would now give us the termination notice on the tenancy agreement because we cannot agree to the new rental rate and rental terms that they were suggesting to us. This also assisted us very much in the sense that we have now been given the green light to make arrangements with the new organisation that would like to come into the building.
But there is a very important clause embedded in that agreement whereby the government has to honour six months rental payment to the Kadavu Holdings and that has been agreed upon dated back to January this year.” Ratu Sela Nanovo
Kadavu House has been empty since last year. The 20-year-agreement stated that the rent to be paid by the government would be $25 per square foot. However, the interim government wanted the rental to be reduced to $14 per square foot. This was not agreed to by Kadavu Holdings and the final decision was made to end the tenancy agreement for the benefit of both parties.
Background
The Kadavu Holdings Limited, who owns Kadavu House along with the Fiji Development Bank, yesterday said it is being pressured by the interim government to reduce it’s rental term from 20 years to about 5 years.
KHL Manager Ratu Sela Nanovo said the interim government was also demanding that the rental rate be reduced from $25 to $14 per square foot.
And Nanovo said with the $710,000 that the company claims it is owed by the powers that be, KHL has been defaulting repayments since January this year.
Although a contract was signed last year between the government and KHL, Kadavu House – which is located along Victoria Parade – remains empty due to the dispute over the level of rent agreed to between the two parties.
Nanovo said the agreement was signed and that the Interim Attorney General, Aiyaz Sayed-Khaiyum, who was assigned by the Interim PM to look into the matter was allegedly delaying the whole process including the rent payment.
In an earlier statement by the Interim AG, released via the Government’s Ministry of Information website, the Government claimed that the KHL and parent company Kadavu Development Company Limited and the Qarase government had used the Kadavu Provincial Council as a front by these companies to secure favourable treatment under the Affirmative Action Programme.
The Affirmative Action Programme was implemented under the Qarase government to “assist groups or categories of persons who are disadvantaged in terms of their socio- economic status.”
The Interim AG said via this release that “…a commitment was given to KHL by the Qarase Government to release a building to be built on the site, for a period of 20 years at (the) exorbitant rental of $25 per sq ft.”
“It is scandalous that an extremely high rental was agreed to, even before the building had been built,” he said.
Sayed-Khaiyum pointed out that on the 27th of December 2007, the interim government had made a payment rental payment of $884,882.80.
The statement also said: “The building named Kadavu House was completed in September 2007 but was not ready for occupation because work on its fit out had not been done.”
The Interim AG, when contacted in Singapore yesterday, said that the Interim PM would deal with the issue in due course.
